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Worldwide Exchange

News/Business. Brian Shactman. Business news including in-depth analysis of worldwide trends.

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U.s. 36, Us 16, China 16, Asia 12, Europe 10, Christine 10, Roger 8, England 6, Nouriel Roubini 5, Aflac 5, Ian 5, Shanghai 5, Ross 5, Germany 5, Owen 4, Jackson 4, At&t 4, Emily 4, London 4, Brent 4,
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  CNBC    Worldwide Exchange    News/Business. Brian Shactman. Business news  
   including in-depth analysis of worldwide trends.  

    August 24, 2009
    4:00 - 6:00am EDT  

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i'm christine tan in asia.
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equity markets strike multiweek highs. bullish comments from fed chief bernie. >> in europe, the rally builds up more steam, despite a feeling of complacency. >> i'm courtney reagan. in the u.s., more dominoes could fall. more banks could go under before the current crisis ends. hello and welcome to cnbc's "worldwide exchange." let's show you where the session currently is is. the ftse 300, 23 points dipped off the high for the session. european stock markets one hour into the trading day. after making three percentage points gains on monday, we're three points up again today as
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well. investors put more risk into the stock market. dollar-yen, 94.93. euro-dollar back from highs. cable knowledging back from the highs. euro/sterling, steady. christine, good to see you. >> here in asia, i'll call it the bernanke bounce after the optimistic comments from bernanke over the weekend. saying that the global economy could be coming out of the recession. the nikkei up 2.5%. the kospi, continuing to watch this climb. this market last week climbed sharply. still up 60% year to date. the sensex up 2.4%. overall a strong showing in
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asia. crude oil seems to be putting on gains, in hopes that a global economy is in order. light crude, $74 a barrel. brent is tacking on gains as well, trading at 74.a58 a barre. courtney, good to see you. >> thanks. a pretty strong day on friday. right now in the u.s., futures looking okay. it looks like futures are looking up. fair value relatively unchanged. we'll see what happens today. see if we'll continue the bernanke bounce on this side as well. looking at the bond market. under a little bit of pressure as renewed strength in equities does sort of weigh on demand for lower-risk assets. in germany, the bund yield up slightly. the action picked up for u.s.
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treasury auctions as one, two and seven-year notes will be sold. up just a hair from where we were before. gold prices off a one-year high. continue to hold steady. later this week, we'll get revised gdp and employment reports. gold up above $950 an ounce at 953. >> joining us for market strategy, we have our panelist, ian beatty. we have clive highland, ceo of capital services. ian, let me start with you. the markets getting a bounce from what bernanke said on friday.
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are you getting a jump going forward? >> we were pretty bullish anyway, but bernanke is keeping things loose but sees the economy going in the right direction for the short term. i think we expected central bankers to keep it loose for longer because the risks of a double dip with the banking systems in the west still being troubled at best. everything that came out of jacks hole confirmed that. they will keep things aggressively loose for a while longer. >> clive, are you as bullish as ian? >> i guess i'm seeing a lot more practical distress. ian's comment about the banking system in the u.k. is absolutely right. i think it's very easy for the big picture indicators to give it a little bit more of legs for a short term. but i think some of the underlying deleveraging hasn't
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been fixed. i'm slightly wary. on my card, i'm just hanging on in there a little bit, being a little bit cautious. i think the financial institutions in the western economies have still got sorting to go. most of the debt is now on government balance sheets as opposed to having been sorted in the market. so i would just be cautious. i would not be -- i'd be taking positions in managed funds as opposed to direct. and i would -- gold is still good. i think that's got legs. i'm slightly nervous. we are going into a double dip. >> that's a perfect segue to my next question. i hear you on the cautious comments. famed economist nouriel roubini thinks we're going to see a double dip. is that what you're believing as well, we'll see that soon? >> sadly, the fundamentals in
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part of my day job, yeah, i don't see any of these issues going away. frankly, a lot of the government rhetoric is not born out in practice. so i think it's disappointing to see the ceo packages that are being put out in the marketplace as normal. they're just outrageous. the value that is being sucked out of the market at the top end of management is not justified. the markets are really -- i think they're deluding themselves. i think when we get back into september, october, new term at school, i think you're going to find that things are going to slide again. i think a lot of the banks are going to have to raise more capital. they're certainly not adequately funded at the moment. yeah, i think -- i do subscribe to the double dip theory. i think we're in for the long haul here. all i can see is short-term profit taking in the market,
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talking itself into a position that is unsustainable. >> great. ian, what do you think? do you agree or disagree? do you think we're in this recovery for the long haul? are you in the roubini camp or the other side? >> neither extreme. the next six weeks looks good. they responded aggressively like that because things are so bad. beyond that then, we see the money supply actually begin to -- still very strong but getting less strong. that's a little bit worrying. the next six months i see things are okay. beyond that, there is significant risk that things will slow down. we have problems in the banking sector in the west. that's not going to be an easy fix. beyond that, things are -- >> we've had a lot of money in
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the central banks, liquidity pumped from the system. how do you transfer from that to the cost cutting to be good on the top line. >> from a market perspective, that's tricky anyway. even if we weren't in this fix. as you transfer, markets have a wobble. like we saw in the '90s in the bond market, the excess liquidity that's been fueling markets while waiting for the economy to recovery starts to get used up by the economy. the chinese market has come down, even as the economy has tornado to be strong. >> with the chinese market off its low, around '87. >> yes. and then a 20% correction was quite painful if you get in late. we do have those speed bumps we've got to negotiate along the way. that's if the economy does
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recover. >> clive, many companies -- not so much cost cutting, there is an argument, they have need a little bit of recovery. we are right to have had stock market get rallies. >> i can't see the demand out there. i think with all the optimistic there, there is a lot of people looking for good news. i don't think there's that much out there. with all the companies are dealing with and private investors seeing things sorted out as opposed to being good news stories. i don't disagree with you. i think there are -- companies are set for margin improvement. >> the margin improvement will mean those stocks are rise, right? >> it should do. but i think there's a fundamental economic problem here, supply and demand. a lot of markets, we're
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oversupplied. shipping is 70% down in volume. that has to be sorted out. you've got problems in germany and france that aren't in the public domain at the moment. i don't think cost cutting alone is not the only thing that needs to be addressed. you need to get ceos who can grow businesses. that's the piece i'm not seeing at the moment. >> clive, thanks so much and ian, thank you. talking about what the central banks are seeing, the ecb chief has warned monetary policymakers, don't forget the lessons of the devastating financial crisis. he's been speaking at the jackson hole meeting in wyoming. he spoke about failure to come through on financial reforms. opel, with gm failing to
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decide on a preferred bidder. the opel leader said he'll take spectacular measures if the u.s. doesn't make a decision this week. angela merkel demanded the u.s. step in. they want magnus named the winning bidder. the hunt is on to find the winner of europe's largest jack pot. 147.8 million euros in the winning lottery. the winning ticket was purchased in a town of 2,000 people near the tuscan coast. i hope he didn't lose his ticket actually. >> i was just about to ask. weren't you in tuscany over the weekend? >> i have no idea what you're talking about. i'll look after you, don't you
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worry, christine. i'll look after you. don't tell anybody. >> just know that diamonds are a favorite thing of mine these days. always a girl's best friend. moving on. here in asia, once bitten, twice shy. not the case for aluminum giant ginalc -- chinalco with rio tinto. this signals a thaw in relations. taking a look at shares. in sydney, the major shares rose 4.8%. 4.7% in london. i'm sorry, the other way around. sinopec shares surging after the
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second biggest oil refinery reported record profits. according to reuters, net profits for sinopec came in just over $3 billion, underscoring the turnaround in fortunes. part of beijing's pricing reforms helped drive profits. weak earnings from the likes of exxon and dutch shell. in another corporate news, shares of toyota rising 2.5%. shrugging off news they are recalling nearly 700,000 cars in china. its largest ever recall in the country. the move follows a discovery of faulty electric window switchers. a spokesman for toyota's china
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operations said he has no reports of any injuries or casualties linked to the deat the time. >> fed vice chairman cohen was speaking in jackson hole wyoming. he said the commitment to low rates is meant to keep inflation from falling, not raise expectations. his comments were in response to a paper written by university of california professor carl walsh. he argues it's inconsistent for the fed to commit to low rates and stable inflation. the fdic shut down guaranteed financial's banking operations on friday, selling the texas lender's assets to bva. it was one of four bank failures on friday, bringing this year's total to 81 with $31 billion in assets. the 12th largest bank failure. it'll cost $3 billion.
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in madrid, bva up now. up 12.27. up 2.5%. influential banking analyst dick bumpt va recommends investors avoid all regional banks over the next 12 to 18 months. if you have more video and blogs, look at cnbc.com. >> policymakers are damned if they do and damned if they don't. nouriel roubini is warning that central banks take the deficit seriously. and there is a warning there could be 200 more bank failures this year.
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and the hopes that the global recovery is picking up steam. is the bernanke bounce a temporary phenomenon? (announcer) we understand. you need to save money.
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global equity markets
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continuing the bounce. moving up to the individual sites. kicking off with becky in london. >> looking at the ftse 100. a positive start to the week nonetheless. banking stocks helping today's gains. rbs among the biggest gainers. gains throughout many of the banking stocks actually. the basic resources stocks helping too. xstrata, rio tinto. we did get earnings from important companies in the basic resources space saying that profits for the first half rose. they're pretty confident for the rest of the year with growth being over 20%. a few of the stocks to mention as well. in the home builders, the earnings declined. yet they told us they see stability coming into the housing market. that is lengthing strength to the shares of that company by
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2.4%. plus we heard from bunzel as well. telling us that the weakness of the pound helped. the economy is having a in this case impact generally. still higher by 5%. a positive session today. how is it looking in germany? >> it's positive. up one-eighth of one percentage point. the general stock is that tex are performing well, steel especially. the biggest surprise gainer is m.a.n. traders are saying it's short covering. lots of investors last week penal have bet on falling share price values for m.a.n.
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now they have to cover their positions. the biggest gainer, up 5.6%. we are seeing deutsche bank up. you have basf, the ceo saying he's even thinking there might be a hostile takeover attempt from a xcompetitor. we are going to paris now. what's up, stephane? >> an important week for the french banks. they will meet to talk about the economic policy for banks.
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they are reporting already that the banks are ready to make some concessions, including more transparency in the way bonuses are calculated. still, some advisers to sarkozy would like to cap bonuses to those in france. the banks warning such an extreme decision would make them highly competitive with u.k. banks, for instance. the cac down 0.8%. also in focus, the carmaker renault is trading higher. on the back of a report that the russian state would create a large automotive group. there is no confirmation. renault is up 1%.
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a flu vaccine will be developed in october according to one company. >> it looks like a friendly monday morning. we're high by 0.75 of a percent. there will be a cost destruction program said to be around 200 to 300 million francs. they supposededly suffered mass declines in sales. we're watching ubs. that is up 2.5%. it is the week after the tax deal with the u.s. and after the swiss government sale of roughly 9%. the bank's chairman has been talking to a couple of papers. he said they're trying to return
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to profitability. still ahead. last but not least, let me talk about the broker moves here around the deutsche banks. the stock up from 60 francs. swiss engineering krogroup solse up after they beat on all levels. let's go to christine in singapore. >> let's run you to some of the market's major movers. greater china markets in the green. the hang seng up 1.7%. strong showing there. a surge in sinopec stocks. shares getting a pop after the company posted record second quarter profits. we had better than expected results from china construction bank. also giving its shares up more than 2% in hong song.
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shares of the indian drugmaker getting a shot in the arm after receiving approval from the u.s. fda to make and market its new pill. they have shares of $26 million u.s. >> the week in the u.s. starts devoid of any economic reports. the action picks up again on tuesday with the monthly home price index and august consumer confidence numbers. wednesday, july durable goods and home sales numbers are out. weekly jobless claims are out on thursday, as they are every week, along with a first reversion to the second quarter gdp. on friday, the final look at the consumer sentiment for august. approximate everybody is watching the consumer. that's your global stock watch.
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>> coming up, shanghai stocks kick often the week on a high note. the market up 60%. is a correction on the cards? >> dr. doom is on it it again. is roubini right, is the economy in for a double dip? we'll talk about that when we come back. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.
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i'm christine tan. in asia, equity markets strike multiweek highs as investors pile back into stocks after comments from bullish chief bernanke. >> the stock market builds up steam despite warnings of placency from jean-claude trichet. >> here in the u.s., more dominoes could fall. a top analyst says more than 200 banks could go under before the current crisis ends. >> you're watching cnbc's "worldwide exchange." global equities are higher. the ftse 300 up 25 points. building on the near 3% gains on friday. up 0.9 for the ftse 100. once again, we're seeing basic
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resources are the biggest gainer in europe. all of which means that the yen is a little bit lower across the board. elsewhere, a bit of profit takinger on the euro and pound against the dollar. sterling slipped back slightly from 1.65 as well. euro-sterling still pretty steady. >> here in asia, strong showing. bernanke bounce after the optimistic comments from bernanke on friday. nikkei getting a nice boost as well. it's up more than 3%. 3.4%. the kospi almost 2%. the shanghai market continuing to watch the market after last week, down 20%. still up 60% year to date. the hang seng up 1.7%. the sensex, 2.5%. ail getting a boost on recovery hopes as well. courtney on that note, let me send it over to you.
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how are the futures looking today? >> futures are looking okay. quite a day on friday. i'm looking over it right now. marginally higher to relatively flat. depends on how full your glass is. relatively trading around the flat line. pretty much the same most of the morning. the ten-year yield, let's see what we've got going. only marginally higher last time, now a bit down. you could almost not even say down at 3.75%. >> the world's bankers uttered a collective sigh of relief in jackson hole over the weekend. the ecb head, jean-claude trichet is saying, don't forget the lessons of the financial crisis now that the worst has passed. we've got to keep policy pretty tough. are they right? >> yeah. that's the message.
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we're hopeful that the economy is going to bounce back. the ecb wasn't looking for positive growth in 2009. for germany and france, the growth has come much quicker. there are down sides, you mentioned nouriel roubini's comments early on. we're hoping the policy that's come through should mean you see ongoing growth, although relatively subdued. >> this same conference last year, mr. trichet was warning about inflation. i mean, which shows you it's a bit of a thankless task making predictions about anything, isn't it? >> the ecb just tightened policy as well. if you look at the federal reserve, they were lambasteded for providing too much stimulus and being too relaxed.
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i think they enjoyed this conference. the fed's forecast were much closer. >> central bankers, their forecasts are worth as much as anyone else's. >> certainly true. i think the federal reserve did express concerns about the future, although probably didn't envision quite the collapse we saw in the ensuing months. federal reserve now is saying, we are looking at optimistic and hopefully a growthful future. there are risks. it's going to be a difficult period ahead. that seems to be the central communication they were making. >> hi, david. it's courtney in the u.s. i hear you speaking about ben bernanke. we're talking about policymakers speaking about roubini and his double dip theory. won't policymakers be put into a bind as they try to trim the deficit? they don't want to undermine the recovery. what else with policymakers?
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>> from the federal reserve, you see a continuation of policy as it stands. we would expect to see further credit easing or quantitative easing from the federal reserve. very awkward from the federal government's point of view. one would have to argue if one is looking at a significant downward risk similar to last time around, further fiscal stimulus regardless of the level of debt is still appropriate on the basis to not do that would cost the federal government more. for an example, that looks at the japanese experience. clearly we would have to see what was happening. a double dip could mean that you saw a big boost to consumption with the cash for clunkers or some other lift that temporarily fell back. you might see a technical double dim, in which case the government might say we are looking at another two quarters of contraction while this consumption drift unwinds. then the impetus of further policy action is probably less.
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>> hey, david. this is christine. we have oil higher on those recovery hopes. could we get to a stage where oil could work the other way with the economy, you could kill off any sustainable recovery? >> yes. thi rhettically obviously. when we saw $145, that was a key feature to see a switch in u.s. consumption trends. we're half that level still, but we are rising. i think markets would start to get twitchy. you'd have to ask what was driving that. clearly, we've seen pick up in demand from china and other asian economies. the rest of the economy sees subdued demand. it's not contracting anymore. it's still only positive by a mere fraction. so there's not a great deal of demand growth coming through here. at the same time, we've seen an increase in the supply capacity certainly from opec. that should keep a lid on oil prices. yes, theoretically if oil prices
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push up to the 140 level, that would clearly put a considerable drag on the global economy. one would have to ask where that was coming from. >> just speaking for the rest of the week, we were talking about on wednesday, the japanese election. how is this going to play into sentiment? are we going to be supported in our recovery beliefs by the end of this week? >> i'm not sure. i think the key elements that will come out are things like consumer confidence. we've got a couple of measures from states, housing activity. housing in the states looks positive. that should be supported. the consumer i think is a bit more of a question mark. here we were asking if the economy is sustainable. these come on a temporary basis. is the consumer in a position to gen operate growth? i think these are the measures we'll be looking at. at the moment, there is not a great deal of evidence to suggest that.
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>> thanks so much. >> we're focusing on the chinese economy right now. it's on a firmer footing, but it's not out of the woods as yet. that's according to the chinese premier in a statement on the government's website. approximate he said the world's third biggest economy is facing fresh difficulties and the effect of the government's short-term policies will fade. win warned that china's export are under pressure as weak external demand continues to bite. the shanghai market rose 1.4% today. let's get more today with owen. what do you mean make of the comments from premier win? it sounds like he's trying to kill off some of the euphoria from the chinese economy. >> i think the question is have they overdone it? the reaction from trying to stimulate growth in china, we've
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seen amazing lending numbers in the last eight, nine months. now the government is taking action to try and reign in the consequences of that. inflation is a real danger heading into next year. >> we have the chinese market really consolidating big time last week. what do you think -- how mindful do you think the chinese government is now of further monetary tightening and risking another sell-off in the equity markets like we saw last week? >> well, if we think inflation is going to be a problem, it may take the authorities quite sometime to really get to grips with that. if we just think of holding equities or property versus holding cash, in an inflationary environment, people are better off holding equities. >> owen, it's ross here. why would inflation be in a sense benign or even positive
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for the stocks to begin with? >> well, in the beginning, the mild inflation phase, which is really -- i guess we can can say single-digit inflation has the effect of lifting nominal earnings. in the hong kong market this is accompanied by an upward rerating of the market. that's only the beginning phase. if we go back to a period of double-digit inflation, then the market will start to attach a much higher risk premium. we could see the market come down. >> it's courtney here. in the u.s., got a question about chinese involvement in u.s. treasuries. we've got a big auction this week, $109 billion. what do you think the involvement and interest is going to be there? >> well, china and the u.s. are
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joined at the hip. so there's not going to be a big change. some months we see less chinese interest. really, we can't see china make any dramatic move away from buying u.s. treasuries as long as they are -- and looks like they will be the world's largest creditor nation for sometime. >> owen, given how the chinese markets are, do you think you see value investing in the chinese market or would you be cautious for now? >> we don't see as much value as we did at the end of last year. as i said, if the choice is sitting on cash, at this point in the cycle, people are still better off in equities. now, i think for the domestic stock market, trading policy announcements is one clear way to do it. clearly at the moment we had a correction. it's probably a good time to come back in and look at the stocks now.
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we think there will be other rounds of tightening and other measures to come closer to the end of the year, beginning of next year. they will also trigger sell-offs. in general, people can't walk away from equities at this point. it's too early. >> okay. owen, thank you very much for your insights. good of you to join us. the head of hong kong research. indian markets also benefitting from the bernanke bounce. we are joined live from mumbai with the indian business report. >> hi. we are bouncing back pretty strongly in trade today. futures expiring this week. a fair bit of leverage today. here in futures, a wee bit of premium. what is buzzing? real estate. some signs there may be an increase in the open sector.
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all the real estate stocks extremely active, up 4.7%. a host of mid cap and large cap stocks have done well in trailed. metals is another space that has moved. pretty much on the underlying movement across the globe. 3.6%. if you look at the nifty, it's about to come up with production. as crude prices are about to shoot up. the metals up 4.35%. of course, l&d has done extremely approximate. all the internals are pointing northwards. the market is extremely positive. five inclining to one declining stock. good going. all indicators pointing up. back to you.
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>> one question from from me. why are indian banks underperforming the market. >> it's interesting. banks had it extremely rough. they're up 1.5% today. the entire market up 2.5%. primarily to do with the supply of market from the bond markets. the sauauction is hitting the markets this week. it's the constant supply of paper that will keep them going. they shot up 3.7% on the ten-year. the trajectory is a slow upward trajectory by the end of this year. that will raise a lot of gains for banks by the end of this quarter. that is a bit of a concern. the trend remains upward. looking at a strong closing, about the 4600 mark. >> thank you very much. live from mumbai.
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for other stories, sinopec shares surging after the second biggest oil refinery reported record profits. the record profit was just under $3 billion, underscoring the change in fortune for struggling refiners. pricing reforms helped drive profits. sinopec saided it is in talk to buy liquid natural gas from a project in new guinea. japanese convenience store lawson teaming up with retailer matsumotokiyoshi to jointly open stores. matsumotokiyoshi had been looking for a business partner as it braces for new competition in the over the counter-drug market, following deregulation. the joint venture will start opening outlets from spring next year. >> we've run out of patience. that's the message from carmaker
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opel after general motors failed to decide on a preferred bidder for its european unit. the leader said he'll take spectacular measures if the u.s. doesn't make a decision this week. the german chancellor demandeded that washington step in. gm failed to name the canadian car manufacturing magna last week despite pressure from berlin. and cricket now. an odd concept to those in north america. the england team regained the ashes, beating australia. australia's batting order fell apart. the final wick et taken. a momentous win for the english team. they regained it in 2005 after a 16-year dry spell only to hand it back in 2007. england managed to win this series by 2-1.
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courtney, this is the game where you can play for five days and still have a draw, which i know is an anathema to anybody in america. >> definitely different but congratulations to england all the same. i understand it's a big win. good for them. in the united states, proctor and gamble is selling its prescription drug business for $3 billion. reports say an announcement could come later today. the drug unit generates $2 billion in annual sales. among its products, a post menopausal osteoporosis. it will reportedly be the largest involving a leveraged loan this year. let's check on p&g shares in frankfurt. up 1% there for proctor and gamble. good news there. dow jones has been sounding out
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potential buyers. the "wall street journal" reports the process is in the early stages and could lead to a joint venture or nothing at all. one contender could be msci, the former morgan stanley division that specialized in building market indesis. the journal said the business is difficult to value but it could be worth $700 million. news corp is the parent of dow jones. it closed at 11.17 on friday. we'll see what happens when it moves in the market today. you can get more news, video and blogs on today's market-moving news at cnbc.com. don't forget to check it out any time you want a little more information. coming up, things are, quote, a hell of a lot better, according to fed member mischkin. >> the yen is weaker across the board.
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the dollar is a little bit of strength off the lows against the euro and the pound.
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the currency markets strong. the stock markets mean that the yen is weaker across the board. the dollar-yen up to 94.75.
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the dollar is a little bit firmer against the euro and the pound. let's find out what's going on. ian, why have we seen the euro and pound come off the highs because the despite that the stocks are up again today? >> i think so as far as the stock market is concerned, they're moving higher over the course week or so. this has been providing some support for the commodity currency lately. i think some of that support is starting to fade. we've seen very strong data coming from the gdp globally in q2. i think the market is starting to call into questions the sustainability of the growth numbers. so although stocks at the moment are quite supported. the supported factor into the currency market is starting to
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fade. particularly now as people are starting to question the sustainability of that growth. i would expect to see currencies performing quite as well as they have been against the dollar. from that point of view, i'd remain extremely cautious. >> just another sign that the correlations are breaking down. >> i think we are in a period whe wherebythe drivers are starting to change. we've seen that with dollar. yen and the bond market. i think we're likely to see that with equities and some of the pro cyclical currencies. as far as the euro is cashed, we may well see it supported at the beginning of the week. they may provide some support if that comes in as strong as expected. towards the end of the week, we'll start to get cautious once again. because we have the m3 data. that could put the euro back under pressure again.
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>> hi, ian, it's courtney in the u.s. this is a quiet day as far as economic data. later in the week, we'll get the first reversion to the gdp and hear more about personal income and spending and the big treasury auction on wednesday. how is the dollar going to be affected by all this news, stronger, weaker, where do we go from here? >> i think it could be interesting later on in the week. i think we are actually likely starting to regain support against the pro cyclical and commodity currencies. i think even if we start to see some of the growth numbers in the u.s. and coming in stronger, that could well start to provide some support for the dollar. but i think also the fact that globally the growth picture has been called into question will also support the dollar. we heard very interesting comments from the chinese prime minister this morning.
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also being far more cautious about the outlook than we have heard recently from chinese authorities. so that could well be a concern as well. if we start to see investors becoming concerned about the growth outlook in the emerging markets, that's where the hope has been for the drivers for global growth. then we could well see a pullback into the dollar. that will provide the u.s. asset markets and the dollar with additional support. >> ian, this is christine. you mentioned comments from the chinese premier. is that starting to have more impact on risk aversion, and more impact on the japanese currency? >> i think the developments in china are having a lot of impact on the currency markets. obviously it was the strong bounce back in the chinese equity markets and the outlook for the chinese growth, which helped to provide optimism globally for asset markets and
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commodity currencies in particularly. if there is a question mark starting to grow over the outlook in china, we could well see some of this risk appetite going into reverse. that would be negative for the commodity currencies in particular. as far as the yen is concerned, we need to keep a close eye on developments running into the election. although a win by the opposition party does seem to believe very well priced in now, i think one thing the market may be overlooking is the likely impact that could have on doj policy, particularly their attitude towards the currency. we've seen the current regime being quite interventionist when they've needed to be. the opposition party suggested they might not believe quite so interventionist. this may provide the yen with upside potential. i would look for dollar-yen to
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come under pressure as we head into the elections. >> all right. we'll be keeping a look out for that. ian standard, currency strategy. we're going for a quick break. coming up next, we'll bring up to speed with the stories making headlines across the globe. >> rio tinto and chinalco talk about the possibility of working together. details later in "worldwide exchange."
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i'm christine tan. in asia, the chinese premier sounds a cautious note about the country's economy. >> here in europe, the market builds up steam despite warnings of complacency. >> in the u.s., more dominoes could fall. a top banking analyst says up to 200 banks could go under before the current crisis ends.
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if you're just joining us in the united states, welcome to the start of your global day with "worldwide exchange." broadcasting live from the u.s., asia and europe. in the u.s. right now, we're seeing futures a bit higher. though they are off the highs of the morning. things could be looking green when the opening bell sounds a bit later today. good news if you want to continue that rally from friday. let's take a look at the bund yield, how we're doing in frankfurt at this time. it looks like we're up just slightly to 333. what a good number there. we'll look at the ten-year yield and see how it compares. down just slightly to 3.56. back to you, ross. >> courtney, great to have you on the program. the ftse global 300 just off the session high, currently up 23 points. european stock markets two hours into trader's session. off the highs.
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gains of two-thirds of 1%. approxima of course, at the highest levels of the ftse on friday. first time there since october. nudging toward that 5,000 mark, as you can see. construction and financial services are firmer. on the currency markets, the yen down across the board. perhaps in another sign that maybe the correlations between the stock markets and currency markets we've in place are breaking down. euro-dollar at 1.43. sterling weaker against the dollar as well. normally you would expect the dollar to be weaker as well. we've also got some euro zone industrial order figures just hitting the wires at the moment. sorry, the june industrial
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posting their strongest monthly gains in 19 months. perhaps another fresh sign that the euro zone block recession-hit economy is on the road to recovery. june industry orders up 3.1% on the month but still down. this shows you the depth of the decline in the euro zone. industrial orders on the year still down 25%. so a lot of people are saying that the bounceback of interest growth is because of enormous decline. >> multiyear highs in asia. the bernanke bounce, his k34e7b comments on friday gave a list. the kospi up 2.5%. we are continuing to watch gains in this market. the market had a sharp correction last week. up more than 60% year to date. this markets continues to rise 1.1%.
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the sensex is up 2.6%. overall strong showing. in terms of oil, up on recovery hopes as well. nymex trading above $74 as well. 19 cents higher. brent as well, trading higher on hopes that the economy might have turned the corner as well. brent trading at $74.32. ross, over to you. >> let's put this in perspective. joining us for the rest of the program, roger nightingale, strategist. central bankers are confident but being cautious at the same time. stock markets continuing to rally. is there going to be enough in the economy to cause stocks to continue this rally? >> i wouldn't put the question that way around. i'd say is the economy weak enough to cause the rally to continue? i would say, yes. >> we need a weak economy? >> absolutely. it's with the weak economy that you get easy money and low
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interest rates. it's in this situation, a relatively weak economy that you get satisfactorily strong profits. i've been forecasting now, as you probably know, a dull economy. in fact, disappointing economy for two years or more. i was going for 5,000 at the end of this year. it looks as if we're going to reach that earlier. >> here's the thing, roger. a lot of people say weak economy translates into weak earnings. weak consumer spending. you obviously disagree with the theory. >> yes. in itself it isn't great for earnings. in fact, there are much more important factors. the really important factor is how the pie is split up. a gdp pie and divide that between the wage earner and the economy in terms of profits. in certain circumstances, one gets a larger share. and one gets a smaller.
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what happens in this sort of circumstance that we're in at the moment is that albeit the pie isn't larger, perhaps declining even, the share going to the corporate sector rises. profits look okay, snot stunning but sufficiently good to justify in the context of very low interest rates. sharply rising equity val yaugs. >> hi, roger. courtney in the u.s. i hear what you're saying. you're not going to buy into the double dip theory that nouriel roubini thinks is going to happen? you think we're going to slide through to recovery? >> i think you've had a very steep decline, inventory driven. you'll get a bounce, which is again inventory driven. when the inventories run out of liquidation, they'll bounce back as they have been doing. the reason you've got industrial production rising a bit and industrial orders rising in europe is because the problem has been temporarily resolved. you're going through second
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quarter and into third quarter with some degree of growth. but what hasn't happened is you haven't gotten any final sales, consumption, capital spending, net exports doing particularly well anywhere. that means that when the inventory goes back to normal, we're going to sag again. we might still get growth into the fourth quarter of next year. but it will be very modest growth. i think very disappointing growth. the politicians won't like it. the electors won't like it. >> roger, where do you see that final consumption? where do you see that final demand? where do you see that top line growth coming in? when do you see things turning the corner? >> a long way out. i think you're talking two, three, four years out. between now and then, i think we get very modest growth. rising unemployment. the unemployment affects people's capacity to spend. it affects their sentiment. my expectation is all that will
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be very dull indeed. in compensation, in partial compensation, the central banks, who are, by the way, being very cautious, the central banks will keep money growing quickly. we'll keep interest rates low. we're not talking about interest rates rising in a few months' time. we're talking about them rising in several years' time. >> the american consumer, so important to the economy. what's it going to take to get them spending again? >> a great deal. probably years. i mean, i think you need to put years between what has happened and what's going to happen. it's a bit like the 1930s. as you go into the 1930s, horrible things happened. then sentiment hit rock bottom. what's more, inflation goes negative. when inflation goes negative, people say, crikey. it's not sensible to go out and buy something.
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because i know that in the years it will be a good deal cheaper than at the moment. i'm going to go rather carefully with my consumption. i will be very cautious and save a good deal more than i used to. i need to save more because my balance sheet isn't great. what you have i think is two or three or four or five years of jolly dull conditions. >> and yet stocks are going to do okay. >> absolutely. they didn't do badly in the 1930s in real terms, adjusted for dividends. >> got to reinvest the dividends. >> absolutely. >> e-mail us at cnbc@worldwide.com. should we be bracing for a double-dip recession? and england cricket fans could be nursing a headache. their team regained the ashes from australia. roger, from what i know, has been in a very celebratory mood.
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fed vice chairman donald cohen is defending the fed bank's promise to keep interest rates low for the foreseeable future. speaking in wyoming, he said the commitment to low rates is meant to keep inflation from falling,
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not raise expectations. kohn's comments were in response to a paper written by california professor walsh. he argued it's inconsistent for the fed to commit to low rates. the "wall street journal" reports the university is selling off holdings in hedge funds, private equity funds and asset managers and will management more money internally. harvard's endowment fell 22% in the first few months of its previous fiscal year. the fund's manager said the move will allow harvard to be more nimble, have better transparency and more liquidity. christine? >> in asia, the chinese premier is sounding a note of caution about the country's economic recovery. in a statement on the the government's website, win warned people about being in his words, blindly optimistic about china's
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recovery and said the world's third largest economy is facing friendly difficulties. he said pressures from weak external demand will continue to weigh on exports and the effects on short-term domestic policies may fade. win also said china will retain its loose monetary policy. once bitten, twice shy. not the case for aluminum company chinalco. it said it is open to talks with rio tinto. the comments come after the rio embassy said they were in the early stages of talks. the comments from both sides signal a thaw in relations after rio walked away $20 billion earlier this year. trading up 3.7%. in sydney, up 4.7%. ross? >> the ecb president trichet has
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been warning policymakers not to forget the lessons of the devastating financial crisis. speaking in jackson hole, wyoming over the weekend, he cautioned against a relapse and failure to carry through on promised financial reforms. the england cricket team regained the ashes and beat australia at the oval in london. i think cricket is difficult to understand. you can play for five days and still get a draw. a big win for the england team. they began tregained the ashes n 2005 only to hand it back in 2007. they've won the best of five series to zero. roger, you were very happy about that. >> yes, indeed. i watched nearly every ball that was made throughout the series. yeah, i think on balance we were
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the better team. although i have to say it could so easily have gone the other way. we were quite lucky in many respects. >> the idea, we had a couple of draws. it's an anathema to our colonial friends in america. five days you could have a draw. there is something on that. i move on from the sport and pick up about how we're going to have slow, sluggish growth in the economy. what does that mean to asset allocation? you think the stock markets are going to do well. you suggest as an environment it should still be okay for the bond markets. >> yes, indeed. we already have negative inflation in very large parts of the world. i haven't done the calculations. i suspect it's over 50% of the world by population and by gdp has got negative inflation. that's primarily driven in the past by lower commodity prices. >> it could be. the next stage -- and this is
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the really crucial one -- is what happens to wages. what we've bean saying in everywhere in the world, pay is moderating. if they carry on moderating and the productivity is satisfactory, even when the commodity prices stabilize, you'll get downward momentum from negative unit labor cost changes as it were. >> you have no xyp#lation changs with the amount of stimulus? >> no. as a general rule, you don't have to worry about the stimulus when you have severe excess supply. it's only when you have excess demand that it creates inflation. >> stick around. >> whether it's news, videos, blogs, anything, and you want to find what roger nightingale was staying, can catch it on cnbc.com. shares are being hammered in early hours of trading. find out why investors are
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nervous about the economy coming up next in our global stock watch.
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global equities are again firmer. becky rounds off what's going for us in london. >> checking in on where we are in the ftse 100, higher by 0.6
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of 1%. some of the stocks moving higher, bankingjgb! stocks, bas resources stocks. basically reacting to the positive sentiment we've seen coming through. bu bundsell creeping in there of they tell us they've beaten expectations. i want to mention another company in line with expectations, margins in continental europe have suffered. the stock is really underperforming. some speculation that the shares of g4 have run away with themselves a little bit. fairly defensive business model. but we expect to hear from the ceo on squawk box later today.
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we have had impact on their business. the stock down today. in their earnings statement, a u.k. home builder. they told us while their profits fell, they did see signs of stability coming back into the market. they expect that there will be a bit of an uptick in the housing market as well. it has been a reasonably strong performer in the market as well. the stock is off the highs. how is it looking in germany today? >> well, the dax is still up by more than half a percentage point but lost the strong momentum we have seen during the early trading session where the dax was almost up by 1%. the biggest gainers today, cyclical stocks such as m.a.n.
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it was up 7% this morning. traders saying there is no fundamental reason by that. it's short covering the old friend of the share prices. lods of traders last week were betting on lower prices for m.a.n. on a positive note, there are steelmakers we have seen, only credit increasing their assessment of the european steel sector. basf up by -- let's have a look, up by roughly 4.1%. that's all from germany. what's going on in paris? >> the french market is still higher. but we see some weaknesses in the banking sector. the largest french bank up 1.8%. there is an important meeting taking place tomorrow with
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sarkozy, the french president, with the french banks to discuss the bonuses payment and the credit conditions in the country. today there is a meeting with the finance ministry to prepare for tomorrow. it's all about how much the banks should pay to their traders. they are advisers to sarkozy who would like to cap bonuses in the financial sector. banks have warned such an extreme decision would make them highly competitive compared to u.k.'s banks. bnp trading lower. also in focus today, the carmaker renault and peugeot in good shape. renault driven by speculation that the russian state could create a large automotive group, in which renault has a significant stake. it would be a positive announcement from renault. mitch lynn, the tiremaker,
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following the trend up 1.4%. the drugmakers say it's confident it would be able to delivered the first flu vaccine before the beginning of october, as previously planned, with the u.s. government. let's look at the swiss market now. >> essentially the same story here. the smi giving away some of its earlier gains today. higher by half a percent. we're seeing financials and cyclical stocks moving higher. investors really seem to be hoping for positive earnings surprise from that company this coming wednesday. it's fueled by press reports saying that swiss live could cut up to 200 or 300 million francs in costs.
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it will be cut as a financial services provider. earnings in switzerland, engineering companies beat expectations on all levels. it did say that the markets would remain difficult. that stock is up 3%. before i let you go, let's quickly talk about ubs. the company's chairman, he's made a couple of comments to the weekend papers. among them is one comment. he's saying the lion share of the companies work to return to profitability still lies ahead. let's go to christine. >> we have greater china markets in the green this monday with the shanghai closing up 1.1%. the hang seng up 1.7%. a surge in sinopec shares contributing to gains in both of these markets. sinopec shares getting a pop. the giant posted record profits today. better than expected first half results earnings from china's construction bank. giving its shares a boost up
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more than 2% in hong kong. shares of the indian drugmaker getting a shot in the arm. after saying it has received approval to make and market its peptic ulcer treatment tablet. with that, let me wrap it up and send it over to you, courtney. >> thanks, christine. it is a quiet start to the week in the u.s. devoid of any economic data today. have no fear. the action picks up on tuesday. the home price index as well as the august consumer confidence numbers. >> okay. i'm afraid we've had a little problem there with the satellite. just to have remind you, consumer sentiment for august as well coming out later in the year. that's the global stock watch. still to come on today's program, the u.s. economixistin sales surge. where do you think the risks
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lie? e-mail us worldwide@cnbc.com. i'm robert shapiro. over a million people have discovered how easy it is to use legalzoom for important legal documents. at legalzoom, we'll help you incorporate your business, file a patent, make a will and more. you can complete our online questions in minutes. then we'll prepare your legal documents and deliver them directly to you. so start your business, protect your family, launch your dreams. at legalzoom.com we put the law on your side.
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it's 21 minutes past the hour. here are the top business stories from around the world. in the u.s., more dominoes could fall as top banking analyst says 200 banks could gurnd before the current crisis ends. >> here in europe, the stock rally builds up steam, despite warnings of placency from jean-claude trichet. >> the chinese premier, a cautious note about the country's economic recovery as asian stocks hit multiweek highs. >> good morning to everyone in the u.s. here on this very early monday morning or night or afternoon, depending on where you are, hello. u.s. futures seeing strength. we are off the highs of the morning going into the first day of trading for the week. looking at the ten-year yield, we saw a bit of pressure this
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morning. relatively flat. let's see where we are right now. the ten-year bund up slightly. the ten-year note down slightly. ross? >> stocks are a little bit firm here. we hit up highest levels since october. reclaimed the 4800 level. only points away from the 5000 mark. the dax up half a percent along with the cac. financial services stocks and insurance stocks slightly stronger. the yen weak are across the board. the dollar has been a little bit strong today against the euro despite the battering of stocks. maybe another sign the correlations we lived with the better part of this year are breaking down somewhat.
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u.s.-sterling nudging down somewhat. >> a nice rally here in asia after what bernanke said on friday. we're getting a bernanke bounce as a result. asian markets having a strong session. nikkei up 3 penalty.5%. hopes that the global economy is picking up. the shanghai market, we are continuing to watch this market after the sharp correction we saw last week. this market is up 1.1% today. the hang seng up 1.7%. and the sensex in india up 2.4%. in terms of nymex and crude, it is up on recovery, hopes that demand could be picking up. crude at $73.80. down two cents. brent as well, down five cents, $74.13 a barrel. a little bit of a putback in terms of nymex and brent.
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let's cross live to tokyo and check in on the trading day from the nikkei. >> thanks, christine. tokyo stocks rebounded sharply monday. they closed 3.35% higher. verch investors were hearted by friday. the market jumped 8.4% while cannon gained 3.6%. hitting the year to date another. the nikkei reported that the firm stands a chance of pushing profit in the year ending next march instead of the projected 10% decline. meanwhile, polls are
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projecting a landslide victory for the main opposition party. investors are even more concerned that dpj lawmakers have been calling for tighter regulations on the consumer finance industry. confirming the nikkei report, the second largest convenience store operator lawsan, and matsumotokiyoshi have announced they will form a business allian alliance. the two major retailers will establish a joint venture by the end of this year to develop a new store chain that combines each other's pharmaceuticals and provide advice on medication. shares in matsumotokiyoshi hit a year to date high for two days in a row. shares in lawson also firm. back to you, christine. >> thank you very much for that.
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courtney? >>. >> joining us now for market strategy is emily sanders, ceo of sanders financial management. still with us of course is roger nightingale. first question here i've got to ask you, good earning season. coming off strong numbers with a record number of companies actually beating the eps. stocks then surge as a result. leave it to nouriel roubini and talk about a possible double dip recession. what's your take on where we are in the state of the recovery? will we see that become out again? >> good morning, courtney. unfortunately, i agree with nouriel roubini. we see a w-shaped recovery both in the markets and the economy. we feel we're on the top edge. the market has run up
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unbelievably. stocks are overvalued in our opinion. with the drivers of high unemployment still continuing to tamp consumption, the good news has been overinflated in our opinion. we will see a 15% retracement in the dow and s&p before things start leveling out and can truly recover. >> you mentioned employment right there. i've got to pick up on some of your point. you think that while the unemployment number is quite high, it doesn't tell the full story. there are so many more people on the sidelines trying to get in. talk to us about what we're missing in those unemployment numbers. >> yes. there are discouraged workers and underemployed. for example, workers on severance pay or who are still not collecting their unemployment benefits, they're unemployed but not counted. then there are workers who are discouraged who have just
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stopped working. if you combine the underemployed and discouraged you're up to 15% true unemployment rate not reflected in the numbers. the slight improvement to 9.4% national unemployment we feel will be going higher into the double digits in the ensuing months. >> roger, to bring you in. your earlier belief, things like high unemployment won't have a meaningful impact on stock market performance. >> no. very meaningful on the economy. absolutely disagree, unemployment is understated. less so in the u.s. than elsewhere. the potential for rising unemployment in europe is just mind-blowing. >> not a drag on stock performance. >> exactly. i don't think it's going to be. i don't think we require top line sales improvement. we want bottom line. so long as we can get wages
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being squeezed more than revenue, i think we'll find we have a very nice stock market performance. >> what do you think of that theory? >> i respectfully disagree with mr. nightingale. as long as the consumer is being squeezed and forced into foreclosing on their homes. if you look at the number of homes, at least in the united states, that have negative equity and what are projected to have negative equity, if home prices drop another 14%, half of u.s. homes could be in negative equity. when you combine that 15.7% shaded unemployment and higher, businesses will be reluctant to invest, until such time that investment number comes do you think meaningful. housing won't be bottoming and unemployment won't trough until
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2011. >> you're wrong, roger. >> no, no, i agree with everything you've just said actually. i couldn't have said it better. all that's going to happen. totally agree. unemployment rising and foreclosures and all sorts of bad consumer sentiment and companies not vechiinvesting. i absolutely agree. gdp will be disappointing. >> but you disagree on the impact? >> the impact it has on the stock market and on profits. i think you can still get moderately satisfactory profit in this environment. that in the context of very low interest rates, zero interest rates, very low bond yield and extraordinarily easy money conditions i think is a sufficient recipe for equities to rise. >> emily? >> without revenues rising, the less worse earnings is really not going to ultimately matter.
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yes, true, businesses have squeezed costs out to the nth degree. better than i've seen them do in the last 20 years. but revenues are not rising. if you look at all the companies that have just reported quarterly earnings, very few of them, maybe only a quarter had increased revenues. that really is a precursor to true economic recovery. >> emily, this is christine. having said all that, what would you recommend clients do with their money then? would you recommend they sit back and hold tight and wait for another drop and go back in or stay away from equity altogether? >> we don't see a drop to the march 9th levels. we do believe that having a good portfolio of dividend-paying stocks, we're really emphasizing the dividend paying now, a good corporate bond. tips are looking better because of the inflation threat. they're a good place to go.
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we like preferred stocks. some of them in the u.s. have yields, not bank preferred stocks, but industrial and so on, preferred stocks. they have a yield of 6, 7%. that's a good place to wait while the market or i should say the economy shows signs of life again. you know, we do agree with jean-claude trichet, a little more cautious than bernanke in jackson hole. we think he is more realistic about how bumpy the recovery will be. >> thank you, emily, ceo of sanders financial management. and also to you, roger nightin gale. coming up on "worldwide exchange," some lucky italian has won almost 148 million euros in the state lottery. for those who still have to work for a living, here's how the u.s. futures are shaping up ahead of the trading day. i'm racing cross country in this small sidecar,
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welcome to cnbc's "worldwide exchange." here are some of the top stories we're watching from around the world.
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the fdic shut down guarantee financial's banking operations on friday, selling the operations to spain's bbva. this year's total, 81 bank failures. $31 billion in assets, the 12th largest bank failure, costing the fdic $3 billion. bbva trading a bit hire, almost 2 penalty 2.5. influential banking banking analyst dick bove said up to 200 more banks could fail during the crisis. he expects the fdic to shore up their insurance fraud. he recommends the consumers avoid u.s. regional banks. proctor and gamble selling its prescription drug business to warner chillcot for $3
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billion. the drug units generates $2 billion in annual sales. among its products, actonel. this is the largest equalization involving a leveraged loan this quarter. good news for the drugmaker. do you have jones has been sounding out buyers for its stock market index business which includes the most recognizable index, the dow jones. the product could lead to a joint venture or nothing at all. one contender is msci. the jourmed the index business is difficult to value but it could be worth $700 million. news corp is of course the parent of dow jones and closed at $11.17 on friday. that's where we'll start the day.
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in asia, the chinese premiere -- >> i'll take that. he sounded a note of caution about the country's recovery. a statement on his website warned people about being blindly optimistic about china's recovery and the world's third largest economy is facing difficulties. he said that the effects of  short-term domestic policies may fade. w he also said china will maintain its relatively loose monetary policy. >> an italian won a record 147 million euros in the lottery. crowds filled the town square on saturday night, celebrating with, what else, champagne.
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what would you do if you had 146 million euros to invest right now, roger? >> i would do the same as i do with my existing portfolio. have a sizeable chunk in government bonds or the currencies i prefer and the rest into acquisitions. i wouldn't be putting a lot into profit at the moment. >> anything in commodities? >> no. i have lower in commodities than most things. i think, in fact, we've had a lovely run in commodities and i think we'll have a lovely one again. i don't think this is the time for me. i'd like to leave it two or three years before i go back. >> that wasn't you in tuscany? >> i'm not sure i was there. there was so much celebrating over the weekend. i might have been there. >> roger, thanks for being here. 12 minutes away from squawk box. carl is with us. >> clearly the summer rally is not over credit. the big question, whether it will spill-over into the fall.
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we have guest hosts. also a strategy session with the fund manager who has $200 billion under management. the summer of america's health care crisis, as you know. georgia congressman tom price of the financial services committee will tell us about the debate and the politics behind overhauling the health care system. something completely different. squawk box regular richard le frak judging the miss universe competition last night. he'll check in with us fwrt baham from the bahamas. busy morning as the rally continues. that will be a fun segment in 12 minutes. >> carl, that -- >> yes? >> the choice of this story, in my mind, proves the change in sentiment, doesn't it? >> yes, absolutely. we need to have her on right there.
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i'd be interested in whatever she's investing in right now. >> yeah. but it just -- the fact that we're running those pictures shows we're feeling better about ourselves. >> yeah. i kept waiting for you guys to come back to me. nope, you kept rolling that like any smart producer would. >> i'm staying tuned, at least until that segment comes up, carl. thank you very much. >> okay. see you later. >> up next, we'll look at the trading day ahead on wall street. will they feel the bernanke bounce today?
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let's get a look ahead to the u.s. trading day. we'll be bringing back emily sanders. it's nice to have you here with us again. thanks for sticking around. we've got a couple of questions left. we know you've got a lot of opinions on this going forward. we'll have the big treasury auction on tuesday, $109 billion. what's the appetite going to be like for the chinese? are they going to buy in?
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what's the momentum going into that auction? >> there is a symbiotic relationship between the u.s. and the chinese. clearly, they are still buying our treasury debt but at a slower pace. the u.s. dollar declined 12.5% this year. it's in a secular decline. so from the chinese perspective, you know, we really can't be surprised they're looking at hard assets in other countries. buying into companies, real estate, et cetera, natural resources all over the world. slowly but surely, the u.s. is losing its place as the world's reserve currency. and the deficit, you know, is ballooning now to 1.58 trillion instead of the estimated 1.48 billion. the government accounting office said it will be 9 trillion in another eight years or so. what do the chinese have to look
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forward to? they're tied to us. but over time they are looking for other places to invest. >> emily, this is christine here. durable goods, consumer confidence sentiment, what is top of your watch list? what are you looking for? >> one of the things that we're looking for that the media is downplaying at the moment is the swine flu season coming up in the autumn in the northern hemisphere. the world health organization predicts one-third of the world's population will contract swine flu. if it's not fatal but keeps people out of work and school for a week of time, this will slow economic activity. right now it's off the radar. we're at the end of summer in the northern hemisphere. but developed countries are pretty soon going to go into cold and flu season. that could be a wildcard that
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isn't really being talked about very much. >> emily, if you suspect we're going to get a setback in the stock market, what happens to bonds? are you going to reallocate more money back into bonds? >> we're already doing so, ross. we still find value in corporate bonds. the high yields were great a few months ago. they're starting to get fully priced now. but there really are many ways to build a layer of good yields in the portfolios, with high dividend paying stocks and good corporate bonds. so we're really getting much more heavily into fixed income, even though by doing so some of this recent rally has been muted. when things starting going down again, which we definitely predict they will, then our clients will be better protected in that scenario.
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>> thank you very much, emily sanders for joining us. ceo of sanders financial 345789. we'll look at the u.s. futures before we have to say goodbye for the morning. it locks like we are up the highs for the day. thank you all for joining us. right now, goodbye. that's it for today's show. ross westgate in europe. >> goodbye. i'm christine tan in asia. thanks for watching "worldwide exchange."
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